Reforming Business For 21st Century - British Academy

Reforming Business for the 21st Century
Reforming Business
for the 21st Century
A Framework for the
Future of the Corporation
1
2
Preface
Professor Sir David Cannadine
As an historian, the future may not be natural territory. Yet the future of the corporation
starts with its history, and the corporation has a history of being a remarkable instrument
for bringing people together to commit to a collective endeavour.
This report from the British Academy sets out a new framework for business in the 21st
century, drawing on the finest minds in the UK and beyond. It is the first in our series
on the Future of the Corporation; a programme which aims to contribute to redefining
business in the 21st century and building trust between business and society.
The ambition of the Future of the Corporation programme reflects not only the scale of
the issues it addresses but also its method to answer them. Far from being a narrow look
at the corporation, it draws on disciplines across the Humanities and Social Sciences –
demonstrating the value of these subjects in understanding the past, making sense of the
present and extrapolating to the future.
It also exploits the British Academy’s convening power in the field of business and policy
to engage leading thinkers in business and government in ensuring the relevance of our
research for business practice and public policy.
This work is vital now because of people’s concerns about rising inequality, increasing
globalisation, declining trust and the impact that new technologies will have on
employment. Business and government have sought different solutions to these
challenges, but alone these solutions have been found wanting.
Through this programme, The British Academy has started a debate on the way in which
business will be conceived, managed and regulated over the coming decades. We are
committed to this dialogue, but we cannot do it alone. It will be a hard road that requires
leadership, audacity and clear-sightedness about the challenges ahead. So we call on all
business leaders, politicians, civil society actors and fellow academics to take note and
join us in collectively working out the solutions.
Professor Sir David Cannadine

FBA FRSL FSA FRHistS
President, The British Academy
3
Foreword
A radical reformulation of the concept of the firm
The Future of the Corporation is one of the most ambitious programmes of research to
have been undertaken to date on the current state and future prospects of business. Its
remit is to consider the implications of economic, environmental, political and social
challenges, and scientific and technological opportunities for the future development
of business. It is organised by the British Academy, the UK’s national body for the
humanities and the social sciences.
31 academics from the humanities and social sciences have been participating in the first
stage of the programme. Guidance from 25 business leaders has grounded this research
in practice. What emerges is a profoundly novel and insightful perspective on business
that lays the foundation for a radical reformulation of the concept of the firm. While the
13 projects were undertaken independently by people from a diverse range of academic
disciplines from institutions in different parts of the world, the conclusions of their
papers demonstrate a consistency of thought and a coherent view of how business should
adapt and respond to the challenges and opportunities it faces.
What this report seeks to do is draw together the substantial body of knowledge and
insights that the thirteen research projects provide on the current challenges that
confront businesses, governments and societies around the world. While setting out
key principles for the future of the corporation, the report is primarily diagnostic in
identifying the nature and source of the problems rather than prescriptive in proposing
detailed policy recommendations. These will be the focus of phase two of the research
programme, which will start in 2019.
Professor Colin Mayer

CBE FBA
Academic Lead, Future of the Corporation Programme and Peter Moores Professor of
Management Studies, Saïd Business School, University of Oxford
5
6
Contents
Preface 3
Foreword 5
Executive summary 8
Introduction 10
Part 1: The case for change 12

A basis in history for corporate purpose 14
Accelerating and disruptive technological change 15
Part 2: A framework for business in the 21st Century 16

Defining and aligning a corporation’s purposes 16
Embedding a commitment to trustworthiness 17
An enabling culture 19
Part 3: The levers of change 20

Ensuring owners play their part 20
Improving corporate governance frameworks 20
Making regulation work 22
Reforming corporate taxation 23
Reframing investment around a corporation’s purposes 23
Conclusions 24
List of contributing papers 26
Acknowledgements 28
7
Executive summary
• Corporations were originally established with clear public purposes. It is only over
the last half century that corporate purpose has come to be equated solely with profit.
This has been damaging for corporations’ role in society, trust in business and the
impact that business has had on the environment, inequality and social cohesion.
In addition, globalisation and technological advances are exacerbating problems of
regulatory lag.
• Together, these issues are intensifying the need for a reconceptualisation of the
corporation around purpose. The Future of the Corporation programme represents
the most comprehensive attempt to date to provide this reconceptualisation. Our
research suggests a need to develop a new framework for the corporation around
three interconnected principles.
• The first is well-defined and aligned purposes. Corporate purpose is the reason why
a corporation exists, what it seeks to do and what it aspires to become. Profit is a
product of the corporate purpose. It is not the corporate purpose. In some, but by no
means all cases, corporate purposes should include public purposes that relate to the
firm’s wider contribution to public interests and societal goals.
• The second principle is a commitment to trustworthiness. When corporations

commit to purposes, they commit to the various parties that are involved in the
delivery of those purposes and vice-versa. This creates reciprocal benefits for the
firm, its stakeholders and society. These arrangements rely on relations of trust.
• The third principle is embedding an enabling culture. The trustworthiness of an

organisation is reliant on clearly articulated values that are adopted consistently in
the culture of the corporation.
• Achieving a shift to this new framework will require coordinated action using
five levers. First is ownership. Corporate ownership is currently equated with
shareholders. Instead it should be associated with defining and implementing
corporate purpose. The rights and responsibilities associated with corporate purpose
should replace property right views of ownership. Different types of owners are suited
to different types of corporate purposes and activities. This points to the need for
diversity in corporate ownership.
• The second lever is corporate governance. Corporate governance is currently

associated with aligning the interests of management and shareholders. Instead it
should be linked to the implementation of corporate purposes. Boards cannot control
some of the largest risks relating to globalisation, the environment and technology.
New performance measures are needed for executives to ensure conformity of
corporations’ activities and investments with their purposes.
• The third lever is regulation. The notion that competition, regulation and

taxation are sufficient to align the interests of business with society is no longer
tenable. Technology is intensifying the problem of regulatory lag. One concrete
proposal in this regard is to promote ‘forward compliance’. More generally, a
fundamental overhaul of regulation is required that encourages companies which
perform significant social functions to incorporate public purposes in their corporate
purposes.
8
• Fourth is taxation. Globalisation has eroded the corporate tax base by allowing
corporations to arbitrage tax domiciles and transfer liabilities to lowest tax
jurisdictions. Our research paper identifies and debates the main reforms that are
currently discussed. However, none of these are without their problems, pointing to
the need for a closer association of corporate with public purposes in determination
of fair levels of taxation.
• The final lever is investment. Public as well as private investment is required to

deliver large-scale, long-term infrastructure investments. Attempts to achieve this
through privatisations, public-private partnerships and private finance initiatives
have often been disappointing. It is in precisely these areas, where corporations
perform important public and social functions, that private and public purposes
need to be aligned through the adoption of public purposes in corporate charters and
articles of association.
• Together these five levers of ownership, governance, regulation, taxation and

investment offer the opportunity of promoting corporate and public purposes around
trustworthy organisations with enabling cultures of integrity.
Below
There is a need for a
reconceptualisation of the
corporation around three
interconnected principles:
purpose, trustworthiness
and culture.
9
Introduction
The bond between the corporation and its public purpose
has waxed and waned since corporations were first established
nearly two millennia ago.
This has happened in response to socio-economic and geopolitical shifts, but the
corporation’s foundations remained embedded in delivering public purposes alongside
commercial functions. It is only over the last half-century that the sharp intensification of
the profit motive has occurred. It came as markets for corporate control emerged to fill the
vacuum in corporate governance created by growing dispersion of ownership.
In 1962, Milton Friedman set out a framework for business in which he described the
social responsibility of businesses as being to increase profits so long as they stay within
the rules of the game. It was a powerful and influential proposition that established
the conventional framework for business around the world. However, it has serious
deficiencies and is no longer tenable as a framework for business in the 21st century. It
has been the source of growing disaffection with business, its environmental, social and
political problems, and the erosion of trust in it. Those problems will intensify in the
future as technological advances risk exacerbating social detriments as well as benefits of
corporations, and public policy responses lag increasingly far behind innovations.
There is an urgent need for reform
In response, the British Academy has brought together leading academics and business
stakeholders under an ambitious programme to redefine the future of business in the 21st
century. The programme is grounded in an academic research and steered by practical
insights from the business community. It began in 2016 when a Steering Group and a
Corporate Advisory Group of business leaders were established to advise the programme.
A set of interviews with business leaders was commissioned and published as “The Voice
of Business” in 2017 and this, together with a series of events, assisted in the design of the
phase one research around ten specific themes: history, purpose, trust, culture, technology,
law, regulation and taxation, corporate governance, ownership, investment and social
benefits. Thirteen groups of academics were then commissioned to explore these themes
drawing on the best available existing evidence. They reviewed existing literatures,
analysed them and developed new thinking on the themes. The thirteen papers are listed at
the end of the report and many of them will be published in a special edition of the Journal
of the British Academy. This report collects the findings together in a single narrative and
draws out initial conclusions and policy implications which will inform the next stage of the
programme.
What the research and the subsequent synthesis has found is that the proposition that
the purpose of business is to increase its profit, with the rules of the game preventing
excesses, is not sufficient for the 21st century. The new framework for the corporation
we present in this report calls for a reinterpretation and integration of three principles:
a redefining of corporate purpose that is distinct from shareholder returns, an
establishment of trustworthiness founded on norms of integrity, and the embedding of a
culture in organisations that enables both.
Corporate purposes are the reasons a corporation is created and exists, what it seeks

to do and what it aspires to become. They reflect the contribution it wishes to make in
10
furthering the interests of its customers, communities and societies and they are the
basis on which relations of trust are created in business. They are distinct from the
consequential implications for the corporation's profitability and shareholder returns.
All corporate purposes should be intrinsic in the sense that they are core to the business
and not just driven by shareholder interests. A close alignment and observance of public
interests in corporate purpose is particularly relevant to some companies that perform
important social functions, such as utilities.
Trust relations in business are created on the basis of corporate purposes. When

corporations commit to corporate purposes, they commit to the various parties that are
involved in their delivery and vice-versa. This creates reciprocal benefits for the firm, its
stakeholders and society at large.
The trustworthiness of an organisation is an attribute dependent on cultural norms

that promote high levels of integrity. It is reliant on clearly articulated values that are
adopted consistently throughout the organisation. Ethical motivations of owners, boards,
managers and employees are necessary to build trustworthiness in relation to customers
and other stakeholders. There is a particular duty on corporations to demonstrate
trustworthiness where there is a dependency of others on it, or incapacity to avoid the
consequences of its violation.
Trustworthy behaviour and corporate purpose must be enabled by a culture of honesty,

integrity and other-regarding interests within the firm. It should be promoted by the
leadership and embedded consistently throughout the corporation. It may be supported
by external regulatory requirements but the ability of external parties to provide effective
regulation is being eroded, particularly by the accelerating pace of technological advances.
We examine five levers that government and business may use to bring about the shift
towards the new framework: ownership, corporate governance, regulation, taxation and
investment.
Owners of corporations have a profound influence on the promotion of corporate

purposes. However, they have not exercised that influence sufficiently. The ownership of
corporations is currently associated with shareholdings and the attribution of shareholder
rights with property rights of shareholdings. Instead, ownership should primarily be
related to the formulation and implementation of corporate purposes.
Corporate governance is at present primarily concerned with aligning managerial

interests with those of shareholders. But it should be recognised as the means by which
corporate purposes are implemented by management in the organisation. The particular
form that corporate governance takes will therefore be specific to the nature of the firm’s
corporate purposes and the particular requirements to deliver them.
The notion that regulation and taxation are sufficient to align the interests of business
with society is no longer tenable. Technological advances are lengthening the lag of
regulation behind the innovatory processes and products that corporations are adopting.
This is intensifying the failure of policy to correct the detriments created by corporations
motivated predominantly by a profit purpose. Instead regulation should be seeking to
align corporate with public purposes in those organisations and circumstances where it is
most relevant because of the social function performed by corporations.
Globalisation is intensifying the inability of nation states to use corporate taxation as a

source of public revenue. Attempts to rectify this through alterations to the structure of
corporate taxation have not been successful to date. This reflects a failure of corporations
to recognise and respond to their dependence on societies and nation states through
11
including payment of fair shares of taxes in their corporate purposes.
The provision of large scale, long-term investment involves the participation of

government as well as the private sector. The performance of privatisations and
partnerships between the public and private sector in their delivery has often been
disappointing. It is in precisely these areas where corporations are performing significant
public and social functions that corporate purposes should be aligned with public
purposes by incorporating the latter in the charters and articles of association of the
former.
The five policy levers of ownership, governance, regulation, taxation and investment offer
the opportunity of reconceptualising corporations of the 21st century within a framework
of defined corporate purposes and a commitment to trustworthiness enabled by corporate
culture.
This report makes the case for change in part 1 and elaborates on the three principles of
the new framework in part 2. Part 3 examines each of the five levers for change before
concluding and describing the next steps for the Future of the Corporation programme.
12
1: The case for change

There is a strong and growing ambition to reconsider and
reinterpret the nature of the corporation, especially in terms
of enabling better alignment between business and public
interests. History tells us there is nothing radical in this
and demonstrates that it has been commonplace in many
manifestations of the corporate form. 1
Tensions caused by technology and evolving corporate forms are not new either.
Technology is once again the driving force behind the need for an evolution in the
corporate form. Increasing technological change is pushing corporations to adapt
business models and management practices in order to survive. But institutions and
regulations are adapting too slowly and the situation calls for a robust new framework for
business that recognises the importance of both corporate and public interests.2
Above
The Code of Hammurabi in
Babylonia represented the first 1 Davoudi, L., McKenna, C. & Olegario, R. (2018), ‘The Historical Role of the Corporation in Society’, Journal of the British Academy, 6(s1)
written attempt to regulate 2 Hsieh, N., Meyer, M., Rodin, D. & van’t Klooster, J. (2018), ‘The Social Purpose of Corporations: A Literature Review and Research Agenda’,
commercial matters. Pending Publication
13
A basis in history for corporate purpose
Throughout its 4,000-year history from the Code of Hammurabi in Babylonia, through
the Roman Republic to the East India Company and the Industrial Revolution, business
enterprise has been motivated by a strong element of public purpose.3 The corporation
was established In Roman Law to perform public functions of minting coins, collecting
taxes, looking after public buildings and undertaking public works. It was then used in
the governance of municipalities in Europe, the creation of the first universities and the
establishment of the Roman Catholic Church.
The corporation was also the basis of the emergence of the merchant trading companies, most
notably the East India Company, and then the companies that built the railroads and canals. With
freedom of incorporation in the 19th century came the private company, which was the backbone
of the rise of manufacturing industry, service companies and transnational corporations.
It is only over the last 60 years that the drive to equate corporate purpose with increasing
profit has become so acute. This has resulted from the emergence of markets in corporate
control – the takeover market — in the 1950s and more recently hedge fund activism. It
was encapsulated in what became the conventional conceptualisation of the corporation
in modern times – the Friedman Doctrine, as first described in Milton Friedman’s book
Capitalism and Freedom in 1962 — that “the one and only social responsibility of business is
to use its resources and engage in activities designed to increase its profits so long as it stays
within the rules of the game”.4 It is the basis of business education and practice and the
formulation of laws and regulation towards business around the world.
The reason why this happened was the changing nature of ownership of corporations
that occurred through the 20th century and the consequence of this for their governance.
After freedom of incorporation was first introduced in the 19th century, families and
founders were initially the owners of predominantly private companies. However, during
the first half of the 20th century ownership became increasingly dispersed in the hands
of first individual and then institutional shareholders, such as life insurance companies,
pension funds and mutual funds.
This created a problem of the separation of ownership of companies from their

management and the concern described by Berle and Means that large corporations were
increasingly being run by management that was accountable to no one.5 The response was
a focus on how to align the interests of management with those of shareholders through
incentives and markets for corporate control.
It is at this point that our research suggests the nature of the corporation erred.6 While it
was right to be concerned about the lack of accountability of management, it was wrong
to see its resolution in control by one party to the firm. The reason why this happened
was that the rights of shareholders were equated with the property rights of owners.
Shareholders bore the risks and rewards of the success and failure of business and so had
corresponding rights to control it.
But shareholders are not in many cases owners in any meaningful sense of the word
and do not aspire to act as owners. This misconception and preoccupation with one
single party to the firm rather than a wider constituency has been the cause of mounting
3 This section primarily summarises findings from Davoudi, L., McKenna, C. & Olegario, R. (2018), ‘The Historical Role of the Corporation in
Society’, Journal of the British Academy, 6(s1)
4 Friedman, M. (1962) Capitalism and Freedom, The University of Chicago Press
5 Berle, A. and Means, G. (1932), The Modern Corporation and Private Property, New York: Harcourt, Brace & World
6 Davoudi, L., McKenna, C. & Olegario, R. (2018), ‘The Historical Role of the Corporation in Society’, Journal of the British Academy, 6(s1)
14
environmental concerns, social tensions and political backlash. These have become
particularly acute since the 2007–8 Financial Crisis, as many of the defects of the
conventional wisdom were laid bare.
The case for change does not only come from looking backwards at the origins of the
corporation and its original foundation in public purpose, but more significantly from
looking forward to the forces that are shaping the corporation of the future.
Accelerating and disruptive technological change
Disruptive innovation has always been part of the corporate landscape.7 The Industrial
Revolution marked the demise of many institutions, corporate structures, labour practices,
social and political norms and laws, but the birth of others. That continuing process of
renewal raises complex and inter-linked economic, social and political questions.8
Technological innovation has, in large part, driven globalisation, prompting growing

tensions between digitally skilled, location-agnostic commercial corporations and the
constraints of nation-based political and legal systems.9 More specifically, the digital age
is bypassing traditional authorities and changing the world of work.10 Smart technologies
are global, networked, intuitive, learning and automated. They rely heavily on trust and
trustworthiness of all participants and transform how people and corporations relate
to each other. Amongst the most disruptive innovations are artificial intelligence (AI),
blockchain, quantum computing and 3D printing, but there are others not yet formed
or publicised.11 Such technologies, many based on data mining and manipulation,
are already impacting economic activity, from new ‘clean’ energy to personal
communications, medicine and bio-engineering.12
Recent analysis suggests that technological innovation may increase incremental profits
for first movers, but also reduce innovation incentives for laggards.13 What is already
clear is that the world’s highest value corporations are based around digital ecosystems.14
Cloud-based, platform businesses rely on global networks of connectivity of both
producers and consumers, rather than the single-location, hierarchical, linear structures
of the past. The CEOs and board members of the future may have to be as adept at the
selection of high-quality algorithms as they are at the management of staff.
The rate of technological change appears to be increasing over time and becoming less
predictable.15 The pace of change exceeds the ability of policy makers and regulators to
respond to it. Instead business itself needs to be better placed to manage it with a greater
clarity of purpose and an enabling culture to accommodate it.
7 ‘Disruptive innovation’ was coined by Bower, J. L. & Christensen, C. M. (1995), Disruptive Technologies: Catching the Wave, Harvard
Business Review, January–February 1995
8 This section primarily summarises findings from Armour, J., Enriques, L., Ezrachi, A. & Vella, J. (2018), ‘Regulation and Law: The Role of
Corporate, Competition and Tax Law’, Journal of the British Academy, 6(s1), Birkinshaw, J. (2018), ‘How is Technological Change Affecting
the Nature of the Corporation?’, Journal of the British Academy, 6(s1) and Belenzon, S., Hamdani, A., Kandel, E., Hashai, N. & Yafeh, Y.
(2018), ‘Technological Progress and the Future of the Corporation’, Journal of the British Academy, 6(s1). Any assertions or findings
presented which are more specific are referenced separately.
9 Belenzon, S., Hamdani, A., Kandel, E., Hashai, N. & Yafeh, Y. (2018), ‘Technological Progress and the Future of the Corporation’, Journal of
the British Academy, 6(s1)
10 The British Academy and The Royal Society (2018) The impact of artificial intelligence on work
12 Ibid.
13 Armour, J., Enriques, L., Ezrachi, A. & Vella, J. (2018), ‘Regulation and Law: The Role of Corporate, Competition and Tax Law’, Journal of the
British Academy, 6(s1)
14 Birkinshaw, J. (2018), ‘How is Technological Change Affecting the Nature of the Corporation?’, Journal of the British Academy, 6(s1)
15
2: A framework for business

in the 21st Century
The synthesis of the ten themes covered by our research
has brought out three principles which could help in the
development of a new framework for the future of the
corporation: corporate purpose, trust and culture.
A corporation must have a set of clearly defined and aligned purposes — the goals it
actively pursues and its contributions to societal goals or public interests. These should
be complemented by an inherent commitment to trustworthiness and supported by an
enabling organisational culture. The key features of this framework are that it integrates
these three principles and requires corporations to take account of a range of stakeholders.
Defining and aligning a corporation’s purposes
Corporate purpose is the reason a corporation is created and exists, what it seeks to do

and what it aspires to become.16 It reflects the contribution it wishes to make in furthering
the interests of its customers, communities and societies and is the basis on which
relations of trust are created in business.17
Corporate purpose is distinct from the consequential implications for the corporation's
profitability and shareholder returns.18 The purpose of corporations is not to produce
profits. The purpose of corporations is to produce profitable solutions for the problems of
people and planet. In the process it produces profits, but profits are not per se the purpose
of corporations.
That distinction is fundamental and its confusion in the Friedman Doctrine has been
the source of many of the defects of current business practice and policy.19 All corporate
purposes should be intrinsic in the sense that they are core to the businesses and not just
driven by shareholder interests.
On the other side of the coin, corporate purpose is sometimes automatically equated
with public purpose — the revealed preferences of societies and the public.20 There are
some circumstances in which the purposes of corporations should indeed be equated
with those of the public interest. For example, a close alignment and observance of public
interests in corporate purpose is particularly relevant to some companies that perform
important social functions, such as utilities. However, other corporations should be able
16 This section primarily summarises findings from Hsieh, N., Meyer, M., Rodin, D. & van’t Klooster, J. (2018), ‘The Social Purpose of
Corporations: A Literature Review and Research Agenda’, Pending Publication. Any assertions or findings presented which are more
specific are referenced separately.
17 Kirby, N., Kirton, A. & Crean, A. (2018), ‘Do Corporations have a Duty to be Trustworthy?’ Journal of the British Academy, 6(s1)
18 Hsieh, N., Meyer, M., Rodin, D. & van’t Klooster, J. (2018), ‘The Social Purpose of Corporations: A Literature Review and Research Agenda’,
Pending Publication
19 Buckley, P. J. (2018), ‘Can Corporations Contribute Directly to Society or only through Regulated Behaviour?’, Journal of the British
Academy, 6(s1)
Pending Publication
16
to pursue purposes that are not necessarily prescribed by public preferences.
The importance of corporate purpose derives from the fact that it is the basis on which
relations of trust are created in business.21 When corporations commit to a purpose,
they commit to the various parties that are involved in the delivery of it and, in return,
the parties to the firm commit to the attainment of the corporate purpose. This creates
reciprocal benefits for the firm, its stakeholders and society at large.22 It promotes more
loyal customers, more engaged employees, more reliable suppliers, more supportive
communities and more participative investors. In other words it raises revenue and
lowers costs, thereby benefiting firms as well as their associated parties.
There are two reasons why societies become entitled to make claims on corporations and
their purpose, both based on the principle of reciprocity:23
1. Corporations rely on society’s legal, social and political systems for adjudication and
protection. They depend on access to infrastructure, health, education and other
public resources, and they are a constant source of social and economic disruption.
2. While efficiency and market competition are often cited as forces that might steer
firms to promote public purposes, pervasive market failures suggest public purpose
cannot be left entirely to the competitive forces guiding profit-seeking corporations. A
web of market imperfections obstructs that goal.
Defining a corporation’s public purposes quickly raises difficult political questions. Public
purposes cannot be determined by the corporation alone due to limitations in the ability
of corporate governance systems to balance and judge competing stakeholder interests,
and the fact that corporations interact within political and social structures. Developing
robust systems and approaches for balancing these competing interests will require a
significant effort on the part of business leaders and policy makers.
Another challenge is the meaningful measurement of corporate and social purpose. Most
current measures of corporate purpose are accounting measures of material and financial
capital and profit. Public purposes also require holistic action-guiding measures for
environmental, social and governance impacts. However, none are yet satisfactory, and
measurement remains the most important condition for creating a working approach to
managing and delivering aligned purposes.
Public purposes are particularly relevant to corporations that perform public functions.
These include utilities, corporations with significant market power, private infrastructure
providers, corporate partners in private finance initiatives and public private
partnerships, and banks. There is a particularly strong case for aligning the purposes
of these corporations with their public purposes. Elsewhere such alignments should be
restricted to those aspects of corporate activities that raise particular public interests, in
relation to, for example, corporate taxation, human rights and corruption.
Embedding a commitment to trustworthiness
Most existing business theories focus on the importance of respecting contractual obligations,
but trust and trustworthiness are as important as legal obligations.24 All disciplines that
22 Ibid.
23 Hsieh, N., Lange, B., Rodin, D. & Wolf-Bauwens M. L. A. (2018), ‘Getting Clear on Corporate Culture’, Journal of the British Academy, 6(s1)
24 This section primarily summarises findings from Kirby, N., Kirton, A. & Crean, A. (2018), ‘Do Corporations have a Duty to be Trustworthy?’
Journal of the British Academy, 6(s1). Any assertions or findings presented which are more specific are referenced separately.
17
interact with business – including law, finance, economics, sociology and psychology —
recognise the importance of trust.25 Trust embodies a set of values, including competency,
reciprocity, consistency and dignity that reduce risk, bind parties together and build value.26
In a global, digitally-connected society where reputation is built via random networks over
which corporations have little or no control, the successful corporation of the future will be
built on trustworthiness, defined as “a robust disposition to fulfil given commitments”.27
Right
In a global, digitally-
connected society, the
successful corporation of
the future will be built on
trustworthiness.
Our research tests, examines and distinguishes between a number of circumstances and
implications of possible public policies to increase the trustworthiness of corporations.28
One conclusion is that the overall social benefits of policies that aim to ensure corporate
trustworthiness will not always outweigh their social costs. If everyone had a moral
right to deal with a trustworthy corporation, then that right would apply regardless
of any utilitarian cost-benefit analysis. An alternative is to encourage stakeholders to
‘cost in’ any possible harms arising from breach of trust and adjust their terms of trade
accordingly.
Furthermore, our research argues that only under certain circumstances should there be
an absolute right to trustworthiness from a corporation.29 There is a particular duty on
corporations to demonstrate trustworthiness where there is a dependency of others on
it, incapacity to avoid the consequences of its violation, or subordination of the interests
of one party to those of another. Elsewhere, well-founded trust and trustworthiness are
valuable. They promote the social efficiency of capitalism, decrease its risks, allow for
respect, validate reciprocity and safeguard dignity.30
Building trustworthiness through the distribution of corporate duties is desirable and

costly, and this responsibility can and should be encouraged by a range of internal and
external measures. Particularly important in this regard is the culture of a corporation.
An enabling culture
There is consensus on the importance of corporate culture and its integrative and holistic
26 Ibid.
27 Ibid.
28 Ibid.
29 Ibid.
30 Ibid.
18
essence, but little on how it is defined, let alone measured and influenced.31 The concept
of corporate culture derives from anthropological and sociological studies of the 1970s
and 1980s. Most definitions centre on similar ideas of organisational culture as a social
phenomenon, concerning mental and physical values, and relating to the facilitating or
hindering of certain kinds of action. Culture is a multi-layered framework that can be
developed to different degrees in different sectors and industries as well as in different units
within a firm.
Culture is vital as a facilitator of strategy and is particularly important when

implementing corporate changes, notably technological change.32 Several studies have
demonstrated a clear correlation between negative business performance and cultural
obstacles.33 A weak or damaging culture is recognised as a cause of excessive risk aversion,
thinking in silos instead of multilaterally, and linear rather than networked transfer of
information. But, despite this, corporate culture is still seen as a ‘soft’ resource, elusive
to define and difficult to measure and manage. The proliferation of measurement
frameworks for organisational culture, using a mix of qualitative and quantitative
techniques is not assisting efforts to clarify and apply the concept.34
A key aspect of culture is its role in promoting ethical standards of integrity and honesty
in corporations as reflected in their values and codes of conduct and in particular, “other-”
as against “self-regarding” or selfish interests of their employees.35 Those values must be
respected and adopted throughout the corporation to avoid wide disparities between a
corporation’s declared culture and the actual norms and expectations operating within
the organisation. False culture can block change, defeat governance and provoke financial
instability. One source suggests culture accounts for 20-30% of the differential in relative
corporate performance.36
To be more than empty words, culture needs to be embedded in organisational practices.37

There are a number of ways of doing this, most of which rely on the organisation’s
leaders to demonstrate the core values and strategic priorities of the culture, ensuring flat
hierarchies and avoiding micro-management. The style and delivery of leadership and
the life-cycle of the corporation itself will influence corporate culture and it is constantly
changing as, for example, some workers choose flexible and independent work in
preference to linear job-for-life employment that corporations once championed. While
culture usually evolves organically, there are circumstances where a corporation might
actively change its own culture: in response to external or internal targets and pressures
or radical changes in management.38
Together, the three principles of defined corporate purposes, trustworthiness of

corporations and enabling corporate cultures offer the potential to reconceptualise
corporations as humane and productive and address the challenges, needs and
opportunities of society in the 21st century. But how should we bring them about?
31 This section primarily summarises findings from Hsieh, N., Lange, B., Rodin, D. & Wolf-Bauwens M. L. A. (2018), ‘Getting Clear on Corporate
Culture’, Journal of the British Academy, 6(s1). Any assertions or findings presented which are more specific are referenced separately.
32 Ibid.
33 For example, Goran, J, Srinivasan, R. & LaBerge, L. (2017) Culture for a digital age. McKinsey & Company: McKinsey Quarterly, July.
34 For a detailed review of frameworks, see Hsieh, N., Lange, B., Rodin, D. & Wolf-Bauwens M. L. A. (2018), ‘Getting Clear on Corporate
Culture’, Journal of the British Academy, 6(s1)
35 Crean, A., Gold, N., Vines, D. & Williamson, A. (2018), ‘Restoring Trust in Financial Services: Governance, Norms and Behaviour’, Pending
publication, 6(s1)
37 Coleman, J. (2013) Six Components of a Great Corporate Culture. Boston: Harvard Business Review. 2- 4.
19
3: The levers of change

There are a range of possible tools and levers available to
business leaders and governments to promote change.
Here we consider five: ownership, corporate governance, regulation, taxation, and

investment. But this list is not exhaustive; for example, incentives and measurement are
frequently mentioned as critical determinants of behaviour.39 However, the five levers lay
the foundations for a more precise and detailed consideration of policy for the next phase
of our research.
Ensuring owners play their part
Our research suggests that ownership is at the heart of the failure of the conventional
framework to depict the public corporation correctly.40 As mentioned above, it ascribes
rights to shareholders equivalent to the property rights of owners. But shareholders are
not necessarily owners and in many cases make no pretence to be so. In particular, the
conventional view does not ascribe corporate purpose to shareholders beyond their
own financial interests. In other words, it does not attribute a responsibility beyond the
achievement of shareholder value.
In contrast ownership in the context of purposeful corporations is intimately associated

with defining and delivering corporate purpose. It does not automatically attribute
property rights to shareholders but recognises that different owners might be best suited
to the achievement of different firms’ purposes. It points to the desirability of diversity of
ownership. In some companies it might be associated with financial institutions, in others
with families and foundations and in others with employees. In all cases someone should
be responsible for the corporate purpose. The “best owner” is not necessarily the creator
of the greatest shareholder value but the most enlightened and visionary deliverer of
corporate purposes.41
Ownership in many countries has changed significantly since the 1950s.42 There has
been a shift from individual and retail ownership to institutional ownership; growing
concentration of ownership in professional asset managers; declines in publicly listed
companies; globalisation of finance; and a change from active to passive investment
strategies by institutional investors. Each of these has had profound influences on the
nature of corporate purposes. However, research will be needed to establish the precise
form of that relation and public policy should recognise the importance of it.
Improving corporate governance frameworks
To date, corporate governance — the allocation of decision-making power and influence

within the corporation — has been associated with aligning the interests of management
Pending Publication and Gordon, J. (2018), ‘Is Corporate Governance a First Order Cause of the Current Malaise?’, Journal of the British
Academy, 6(s1) and Buckley, P. J. (2018), ‘Can Corporations contribute directly to society or only through regulated behaviour?’, Journal of
40 This section primarily summarises findings from Villalonga, B. (2018), ‘The Impact of Ownership on Building Sustainable and Responsible
Business’, Journal of the British Academy, 6(s1). Any assertions or findings presented which are more specific are referenced separately.
41 Villalonga, B. (2018), ‘The Impact of Ownership on Building Sustainable and Responsible Business’, Journal of the British Academy, 6(s1)
42 Gordon, J. (2018), ‘Is Corporate Governance a First Order Cause of the Current Malaise?’, Journal of the British Academy, 6(s1)
20
with shareholders and promoting shareholder value. Our research suggests that it should
instead be recognised as a key tool in delivering corporate purposes.
Achieving this will require significant changes to existing corporate governance

arrangements. The new Corporate Governance Code in the UK has gone further in this
direction than any previous attempt to date.43 Principle B of the Code states that: “the
board should establish the company’s purpose, values and strategy, and satisfy itself that
these and its culture are aligned. All directors must act with integrity, lead by example and
promote the desired culture.” Companies that do not comply with the provisions of the
Code will be required to explain why they do not do so.
Other recent proposals go further than this in prescribing the types of governance
arrangements companies should adopt. In the United States, Senator Elizabeth Warren
has proposed an Accountable Capitalism Act setting out a co-determination approach to
corporate governance.44 It takes the view that the relentless maximisation of shareholder
value is the root cause of many economic and governance problems. However, it also
recognises the risk of co-determination degrading the economic performance of some
companies, so only the largest are targeted by the proposed legislation. Similarly in the
UK, the Labour Party is proposing a combination of employee ownership and employee
board representation in larger companies.45
Whether change needs to be mandated, as suggested by Elizabeth

Warren and the UK Labour Party proposals, or encouraged, as
under the Corporate Governance Code, depends on the extent to
which it is accompanied by supportive purposeful ownership as
described in the previous section. Without owners who effectively
The board promote purposeful governance and protect management

from corporate raiders that equate purpose with profits, then
should establish governance codes on their own are unlikely to be adequate.
the company’s Failures of corporate governance in part result from the flawed
composition of corporate boards.46 Independent directors may
purpose, values be insufficiently informed and committed to serve as credible

monitors of management’s strategy and operational performance,
and strategy and the concept of board-monitoring may not be suited to

corporations whose projects and business strategy are difficult
for equity markets to evaluate. Addressing this requires the
identification of new measures of corporate performance that
extend beyond financial returns and relate to human, social and
natural capital as well as financial capital.
Even if ownership and governance are aligned then companies cannot on their
own insure their stakeholders against the systemic risks of technological changes
and globalisation to which they are being increasingly subject.47 This may require
governments to bear some of the risks of, for example, the consequential reskilling needs
of employees. We return to partnerships between public and private sectors below when
we consider reframing investment around corporate purposes.
43 Financial Reporting Council (2018), The UK Corporate Governance Code, July.

44 See https://www.warren.senate.gov/imo/media/doc/Accountable%20Capitalism%20Act.pdf
45 See speech by John McDonnall (24 September 2018), Shadow Chancellor, proposing an “Inclusive Ownership Fund”
46 Gordon, J. (2018), ‘Is Corporate Governance a First Order Cause of the Current Malaise?’, Journal of the British Academy, 6(s1)
47 Ibid.
21
Making regulation work
Globalisation, digitalisation and rapid technological innovation have enabled

unprecedented mobility for key corporate functions and assets, including intellectual
property rights, administration centres, production and sales.48 However, the analysis
conducted for our research shows that the speed and reach of that capability is posing
major questions for current models of regulation and taxation.49
How can regulators and lawmakers resist intellectual and regulatory capture through
open lobbying and more subtle forms of influence? How can states maintain corporate
tax revenues in the face of fiscal arbitrage and tax competition? How can regulators clamp
down on profit-shifting and strategic transfer pricing?
These questions fuel doubts about the trustworthiness, transparency and accountability
of both corporations and governments. The lag between technological changes that
result in disruptive business models, and the corresponding regulations and institutional
changes that are needed to maintain public confidence has increased.50 One way to
address this is through ‘forward compliance’51 - a dynamic response where corporations
are expected to deliver conduct ‘consistent with anticipated regulatory requirements’,
shifting supervisory onus from regulators to firms themselves.
In the UK and US, corporate tax rates

declined from around
40% in 1980 to 25% by 2015.
As outlined in our research, many companies incorporate and promote social
responsibility in their corporate purposes and at the very least appreciate the need to ‘do
no harm’. There is a large array of codes of conduct, standards and guidelines available
to support such objectives. However, alignment of corporate with public purposes needs
to be made explicit in the case of corporations that perform social and public functions,
such as utilities and corporations with significant market power. In these cases, regulation
should require companies to incorporate their licences to operate in their charters and
articles of association, thereby imposing fiduciary responsibilities on directors to uphold
their public as well as private purposes.
Reforming corporate taxation
Globalisation has proven highly rewarding for an increasingly concentrated pool of
49 This section primarily summarises findings from Armour, J., Enriques, L., Ezrachi, A. & Vella, J. (2018), ‘Regulation and Law: The Role of
Corporate, Competition and Tax Law’, Journal of the British Academy, 6(s1). Any assertions or findings presented which are more specific
are referenced separately.
51 Armour, J., Enriques, L., Ezrachi, A. & Vella, J. (2018), ‘Regulation and Law: The Role of Corporate, Competition and Tax Law’, Journal of the
22
corporate owners, but it has also alienated and displaced other interests.52 It has raised
incomes in low-income countries but concentrated wealth in high-income countries. In
the UK and US, corporate tax rates declined from around 40% in 1980 to 25% by 2015.53
Erosion of corporate tax has created opportunities for those with higher personal income
tax rates to use corporations as vehicles for deferral of taxes.54
Corporate taxation is in need of urgent reform and several alternatives have been
considered. One involves shifting both corporate and personal taxes from a focus on
production to consumption; another is to move personal taxation to an accrual basis.
There are limitations to both. A third approach is to consider how corporations can be
encouraged to promote a more socially responsive agenda that includes a willingness to
pay a “fair share” of taxes as part of their corporate purposes.55
Reframing investment around a corporation’s purposes
The relationship between socially responsible business practices and financial

performance has been the active subject of research.56 In early studies, results were mixed:
socially responsible practices did not necessarily correlate with financial performance
and in some cases detracted from it. More recent studies suggest that corporations that
embed environmental, social and governance values perform better than other firms and
are less prone to failure.
Private capital markets are often thought to suffer from short-termism in the allocation
of financial resources for investment. The short payback periods that financial markets
require of corporate investment constrain the projects that the private sector can support,
necessitating the participation of the public sector in large-scale, long-term investments,
such as infrastructure projects.
The relative merit of private and public sector ownership and investment has been lent
particular significance by the success of the Chinese economy, and the poor record of
investment by some privatised corporations in the west.57 In some cases, this is raising the
prospect of renationalisation of previously privatised entities and contracted out activities.
It is in precisely where private corporations deliver public services that corporate

purposes should be aligned with public purposes. As described above, this can be
achieved through incorporating licence to operate conditions in companies’ charters and
articles of association, thereby imposing a fiduciary duty on directors of corporations to
uphold their public as well as private purposes.
Together reform of ownership, governance, regulation, taxation and investment offer the
prospect of establishing the purposes, trustworthiness and cultures that are needed of
21st century corporations.
52 A number of papers within the programme comment on this general trend: Armour, J., Enriques, L., Ezrachi, A. & Vella, J. (2018),
‘Regulation and Law: The Role of Corporate, Competition and Tax Law’, Journal of the British Academy, 6(s1), Gordon, J. (2018), ‘Is
Corporate Governance a First Order Cause of the Current Malaise?’, Journal of the British Academy, 6(s1)
53 Desai, M. & Dharmapala, D. (2018), ‘Revisiting the Uneasy Case for Corporate Taxation in an Uneasy World’, Journal of the British Academy,
6(s1), based on World Revenue Longitudinal Dataset (WoRLD), available at: http://data.imf.org/revenues
54 This section primarily summarises findings from Desai, M. & Dharmapala, D. (2018), ‘Revisiting the Uneasy Case for Corporate Taxation
in an Uneasy World’, Journal of the British Academy, 6(s1). Any assertions or findings presented which are more specific are referenced
separately.
55 Buckley, P. J. (2018), ‘Can Corporations Contribute Directly to Society or only through Regulated Behaviour?’, Journal of the British
Academy, 6(s1)
56 Villalonga, B. (2018), ‘The Impact of Ownership on Building Sustainable and Responsible Business’, Journal of the British Academy, 6(s1)
57 Offer, A. (2018) ‘Patient and Impatient Capital: Time Horizons as Market Boundaries’, Pending Publication
23
Conclusions
The findings of this research call into question the notion in the Friedman Doctrine that
the one and only social responsibility of business is to increase profits while abiding
by laws and social norms. It has noted that the corporation was created to perform a
public function.58 It is only over the last 50 years that the preoccupation with profits has
emerged.
This was a response to the problem of the lack of accountability of management

resulting from the separation of ownership and control that emerged as a consequence
of the growing dispersion of shareholdings during the first half of the twentieth
century. Shareholder primacy was promoted on the basis of a property right view of the
corporation that associated shareholder rights with its ownership.
This was a mistake and it is the source of the growing disaffection with business, its
environmental, social and political problems, and the erosion of trust in it. Those
problems will be intensified in the future by technological advances that risk exacerbating
social detriments as well benefits of corporations and lengthening the regulatory lag
between innovations and policy response.
Reimagining the role of business for the 21st century requires a new framework that
combines and connects defined corporate purposes, a commitment to trustworthiness
and an enabling corporate culture.
The purpose of the corporation is the reason it exists, what it seeks to do and what it
aspires to become. The purpose of the corporation is to produce profitable solutions for
the problems of people and planet. In the process it produces profits. But the purpose of
business is not to produce profits per se, nor to profit from producing problems for people
and planet.
In some cases where corporations perform important social functions, for example in
utilities, companies with significant market power and those engaged in the provision of
public services and public-private partnerships, corporate purposes should be aligned
with public purposes that reflect the interests and preferences of society and the public at
large. But this does not apply to other corporations as a requirement.
Corporations commit to the creation and fulfilment of their corporate purposes. In the
process they commit to the various parties to the firm that are involved in the delivery of
those purposes. Those parties in turn commit to the corporation. This creates relations of
trust that produce mutual benefits to the corporation and the parties associated with it.
They are reflected in higher revenues, lower costs and greater profits of corporations.
The ability of the corporation to commit to its purposes, and the parties associated with
it, derives from its trustworthiness. This trustworthiness in turn is a reflection of the
internal norms and values of the corporation based on a culture of honesty, integrity and
other- rather than self-regarding interests. It should be promoted by the leadership and
embedded consistently throughout the corporation.
There are five levers used to promote corporate purposes, trustworthiness and enabling
58 It is important to note that the relevance of this finding is in the fact that corporations were established with a defined public purpose,
rather than passing judgement on the nature of that purpose.
24
corporate cultures. The first is ownership. The ownership of corporations is currently

associated with shareholdings. That is a mistake and leads to an inappropriately
restrictive conception of ownership. Instead, ownership should primarily be related
to the formulation and implementation of corporate purpose. There are many forms
of ownership that are associated with this including individual, family, institutional,
employee, cooperative, mutual and public ownership, depending on the nature of
corporate purposes. This points to the importance of diversity of ownership and the
responsibilities as well as rights that go with it.
The second lever is corporate governance. At present this is primarily linked to the
alignment of managerial interests with those of shareholders. Again, this is a mistake.
Corporate governance is the means by which corporate purposes are implemented by
management in the organisation, and the appropriate values and culture are adopted. The
particular form that corporate governance takes will therefore be specific to the nature of
the firm’s corporate purposes and the particular requirements to deliver them.
The third lever is regulation. Technological advances are lengthening the lag between
regulation and the innovatory processes and products that corporations are swiftly
adopting. This is intensifying the failure of policy to correct the detriments created by
corporations motivated predominantly by a profit purpose. Instead regulation should be
seeking to align corporate with public purposes in those organisations and circumstances
where it is most relevant because of the social function performed by corporations. This
can be achieved through, for example, incorporating public purposes in the charters and
articles of association of private corporations.
The fourth lever is taxation. Globalisation is intensifying the inability of nation states
to use corporate taxation as a source of public revenue. Attempts to rectify this through
alterations to the structure of corporate taxation have not been successful to date.
This reflects a failure of corporations to recognise and respond to their dependence on
societies and nation states through including payment of fair shares of taxes in their
corporate purposes.
The final lever is investment. The provision of large-scale, long-term investments

involves the participation of government as well as the private sector. The performance of
privatisations and partnerships between the public and private sector in their delivery has
often been disappointing. It is in precisely these areas where corporations are performing
significant public and social functions that corporate purposes should be aligned with
public purposes by incorporating the latter in the charters and articles of the association
of the former.
Together these five levers of ownership, governance, regulation, taxation and investment
can create 21st century corporations with corporate and public purposes delivered in a
trustworthy manner with cultures of integrity.
In the next phase starting in 2019, the Future of the Corporation programme will begin
to develop precise business practice and policy implications of the framework identified
in this first phase. In particular, it will consider the laws and regulation, ownership and
governance, and measurement and management required by the new framework. The
British Academy will continue to support rigorous and objective research and analysis to
underpin the programme, publishing new findings as they emerge, and will commit to
convening leaders and engaging widely in order to reimagine the future collectively and
purposefully.
25
Contributing papers
The research for the Future of the Corporation Programme was commissioned by
the British Academy in early 2018. 31 distinguished academics contributed papers
that were peer reviewed. None of the papers have been previously published. The
academic lead on the Future of the Corporation Programme is Professor Colin
Mayer of the University of Oxford Saïd Business School.
Paper 1 Davoudi, L., McKenna, C. & Olegario, R. (2018), ‘The Historical Role of
the Corporation in Society’, Journal of the British Academy, 6(s1)
Paper 2 Hsieh, N., Meyer, M., Rodin, D. & van’t Klooster, J. (2018), ‘The Social
Purpose of Corporations: A Literature Review and Research Agenda’,
Pending Publication
Paper 3 Kirby, N., Kirton, A. & Crean, A. (2018), ‘Do Corporations have a Duty
to be Trustworthy?’ Journal of the British Academy, 6(s1)
Paper 4 Crean, A., Gold, N., Vines, D. & Williamson, A. (2018), ‘Restoring Trust
in Financial Services: Governance, Norms and Behaviour’, Pending
Publication
Paper 5 Hsieh, N., Lange, B., Rodin, D. & Wolf-Bauwens M. L. A. (2018), ‘Getting
Clear on Corporate Culture’, Journal of the British Academy, 6(s1)
Paper 6 Gordon, J. (2018), ‘Is Corporate Governance a First Order Cause of the
Current Malaise?’, Journal of the British Academy, 6(s1)
Paper 7 Belenzon, S., Hamdani, A., Kandel, E., Hashai, N. & Yafeh, Y. (2018),
‘Technological Progress and the Future of the Corporation’, Journal
of the British Academy, 6(s1)
Paper 8 Birkinshaw, J. (2018), ‘How is Technological Change Affecting the Nature

of the Corporation?’, Journal of the British Academy, 6(s1)
Paper 9 Desai, M. & Dharmapala, D. (2018), ‘Revisiting the Uneasy Case

for Corporate Taxation in an Uneasy World’, Journal of the British
Academy, 6(s1)
Paper 10 Armour, J., Enriques, L., Ezrachi, A. & Vella, J. (2018), ‘Regulation and
Law: The Role of Corporate, Competition and Tax Law’, Journal of the
Paper 11 Offer, A. (2018) ‘Patient and Impatient Capital: Time Horizons as

Market Boundaries’, Pending Publication
Paper 12 Villalonga, B. (2018), ‘The Impact of Ownership on Building

Sustainable and Responsible Business’, Journal of the British
Academy, 6(s1)
Paper 13 Buckley, P. J. (2018), ‘Can Corporations Contribute Directly to

Society or only through Regulated Behaviour?’, Journal of the British
Academy, 6(s1)
26
Reforming Business for the 21 Century
27
Acknowledgements
Particular thanks are due to Caroline Allen who was commissioned by the Academy to
summarise the research and contributed significantly to this report.
Staff
Simon Delafond Head of Digital
Jennifer Hawton Development Manager
Jo Hopkins Director of Development
Naomi Joyner Head of Press and Media
Barbara Limon Head of Policy (Public)
Molly Morgan-Jones Director of Policy and Engagement
Henry Richards Project Manager, Future of the Corporation
James Rivington Head of Publicationst
Kate Rosser-Frost Project Manager, Future of the Corporation
Michelle Waterman Head of Development
Steering Group members

Mohamed Amersi Chairman, The Amersi Foundation; Trustee, Prince's Trust
International; and Member of the Global Leadership Council,
Saïd Business School, University of Oxford
Professor Marco Becht Executive Director, European Corporate Governance Institute
The Hon Mr Justice William Blair Judge in Charge of the Commercial Court,
Courts and Tribunals Judiciary
Sir Victor Blank Vice-President, Jewish Leadership Council
Luke Fletcher Partner, Bates Wells Braithwaite
Baroness O'Neill of Bengarve Professor Emeritus, University of Cambridge;

past President of the British Academy
Lucy Parker Partner, Brunswick Group
Paula Woodman Senior social enterprise advisor, British Council
Professor Mike Wright, FBA Professor of Entrepreneurship,

Imperial College Business School
Academic Lead
Professor Colin Mayer CBE FBA has made a huge contribution to the programme
and the research. Without his leadership and support, the programme would not have
been possible.
28
Advisory Groups
The conclusions of this report have been guided by the advice and insights of the Steering
Group and Corporate Advisory Group. Members acted in an individual, not representative
capacity and the views expressed in this report are not necessarily those of each member.
Corporate Advisory Group members

Mohamed Amersi Chairman, The Amersi Foundation; Trustee, Prince's Trust International;
and Member of the Global Leadership Council, Saïd Business School,
University of Oxford
Göran Ando Chairman, Novo Nordisk
Cyrus Ardalan Chair, OakNorth Bank
Mike Barry Director of Sustainable Business, M&S
Dominic Barton Managing Director, McKinsey
Julian Birkinshaw FBA London Business School Professor
Beatrice Bondy Senior Advisor, Investor AB
Juliet Davenport CEO and Founder, Good Energy
David Davies Partner, Bates Wells Braithwaite
Richard Gillingwater CBE Chairman, SSE
Bethan Grillo Director, PwC
Hans-Christoph Hirt Executive Director and Head of Hermes EOS,

Hermes Investment Management
Ingrid Holmes Associate Director - Policy, Hermes Investment
David Jackson Company Secretary, BP
Mark Lewisohn Group Managing Director, UBS

Member of Council, University of Cambridge
Warner Mandel COO, Rothschild Group
Colin Mayer CBE FBA Saïd Business School, University of Oxford (Chair)
Sir Adrian Montague Chairman, Aviva
Peter Norris Chairman, Virgin Group
Lucy Parker Partner, Brunswick Group
James Perry Founder and CEO, Cook Foods
Stuart Roden Chairman, Lansdowne Partners
Carine Smith Ihenacho Global Corporate Governance Officer,

Norges Bank Investment Management
Lorne Somerville Managing Partner, CVC Capital Partners
Marc St John Partner, Investor Relations, CVC Capital Partners
Simon Thompson Chairman, Rio Tinto and 3i
Daniela Weber-Rey Attorney and Member of the Government

Commission for the German Corporate Governance Code
Harlan Zimmerman Senior Partner, Cevian Capital London
29
We are keen to collaborate with other research and policy initiatives that are covering
similar issues. We maintain a regular series of events and we will continue to share
invitations to these events and updates on the project by way of our mailing list. To get
involved in the programme, please register your details on our mailing list with this link:
thebritishacademy.ac.uk/fotc or write to us on
fotc@thebritishacademy.ac.uk.
Our partners make the Future of the Corporation programme

possible with their generous financial support.
Principal supporters Associate supporter
Corporate partners
30
31
The British Academy
10–11 Carlton House Terrace
London SW1Y 5AH
thebritishacademy.ac.uk/fotc
Registerd charity no. 233176
Published November 2018

ISB 978-0-85672-627-9
Designed by Only
Twitter: @britishacademy_
Facebook: TheBritishAcademy
32

Reforming Business For 21st Century - British Academy

Загружено:

Сведения о документе

Оригинальное название

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

Reforming Business For 21st Century - British Academy

Загружено:

Авторское право:

Доступные форматы

Reforming Business for the 21st Century

Professor Sir David Cannadine

President, The British Academy

Professor Colin Mayer

Part 1: The case for change 12

Part 2: A framework for business in the 21st Century 16

Part 3: The levers of change 20

• The second principle is a commitment to trustworthiness. When corporations

• The third principle is embedding an enabling culture. The trustworthiness of an

• The second lever is corporate governance. Corporate governance is currently

• The third lever is regulation. The notion that competition, regulation and

• The final lever is investment. Public as well as private investment is required to

• Together these five levers of ownership, governance, regulation, taxation and

There is an urgent need for reform

Corporate purposes are the reasons a corporation is created and exists, what it seeks

Trust relations in business are created on the basis of corporate purposes. When

The trustworthiness of an organisation is an attribute dependent on cultural norms

Trustworthy behaviour and corporate purpose must be enabled by a culture of honesty,

Owners of corporations have a profound influence on the promotion of corporate

Corporate governance is at present primarily concerned with aligning managerial

Globalisation is intensifying the inability of nation states to use corporate taxation as a

including payment of fair shares of taxes in their corporate purposes.

The provision of large scale, long-term investment involves the participation of

1: The case for change

A basis in history for corporate purpose

This created a problem of the separation of ownership of companies from their

Accelerating and disruptive technological change

Technological innovation has, in large part, driven globalisation, prompting growing

2: A framework for business

Defining and aligning a corporation’s purposes

Corporate purpose is the reason a corporation is created and exists, what it seeks to do

to pursue purposes that are not necessarily prescribed by public preferences.

Embedding a commitment to trustworthiness

Building trustworthiness through the distribution of corporate duties is desirable and

Culture is vital as a facilitator of strategy and is particularly important when

To be more than empty words, culture needs to be embedded in organisational practices.37

Together, the three principles of defined corporate purposes, trustworthiness of

3: The levers of change

Here we consider five: ownership, corporate governance, regulation, taxation, and

Ensuring owners play their part

In contrast ownership in the context of purposeful corporations is intimately associated

Improving corporate governance frameworks

To date, corporate governance — the allocation of decision-making power and influence

Achieving this will require significant changes to existing corporate governance

Whether change needs to be mandated, as suggested by Elizabeth

The board promote purposeful governance and protect management

should establish governance codes on their own are unlikely to be adequate.

purpose, values be insufficiently informed and committed to serve as credible

and strategy and the concept of board-monitoring may not be suited to

43 Financial Reporting Council (2018), The UK Corporate Governance Code, July.

Making regulation work

Globalisation, digitalisation and rapid technological innovation have enabled

In the UK and US, corporate tax rates

Reforming corporate taxation

Globalisation has proven highly rewarding for an increasingly concentrated pool of

Reframing investment around a corporation’s purposes

The relationship between socially responsible business practices and financial

It is in precisely where private corporations deliver public services that corporate

This was a response to the problem of the lack of accountability of management

corporate cultures. The first is ownership. The ownership of corporations is currently

The final lever is investment. The provision of large-scale, long-term investments

Paper 8 Birkinshaw, J. (2018), ‘How is Technological Change Affecting the Nature

Paper 9 Desai, M. & Dharmapala, D. (2018), ‘Revisiting the Uneasy Case